By proposing that Indians work longer to achieve a larger national output, N.R. Narayana Murthy, the founder of India’s iconic business house, Infosys, has issued something akin to a challenge to his compatriots. In particular, he proposed a 70-hour work week. To strengthen his case he has pointed to the experience of Japan and Germany after the Second World War, when citizens worked longer hours than we do on average in India today. It is indeed correct that these countries had a miraculous rise in the 1950s, but is the comparison valid? Can Indians simply choose to work longer hours to replicate their experience? This is not obvious.
Output, demand and labour
Ever since the Keynesian Revolution in economics, we know that output is determined by aggregate demand, which is the demand for the total volume of goods and services produced in an economy. The demand for labour is entirely dependent upon this demand. There is no demand for labour independent of the demand for goods. Firms that employ more labour while aggregate demand has not increased will find themselves with unsold goods. So, an offer by workers to work longer hours will not ensure that they will find employment so long as firms are unwilling to hire them.
